[Answered] Examine the shift from MGNREGA to the VB-G RAM G Bill, 2025. Analyze the implications of the 60:40 funding split on state finances and evaluate how the 60-day agricultural pause impacts the statutory guarantee of 125 days of work.

Introduction

MGNREGA, covering over 8.6 crore job cards, has functioned as a rights-based safety net; the VB-G RAM G Bill, 2025 marks a paradigm shift toward shared financing and centrally managed employment.

Nature of the Policy Shift

1. Rights-based to Scheme-based Framework: MGNREGA created a legal entitlement to work; VB-G RAM G redefines it as a centrally sponsored programme.
2. Demand-driven to Allocation-driven: Labour budgets based on demand are replaced by “normative allocation” decided by the Centre.

Key Structural Changes

1. Guaranteed Days of Employment: Increase from 100 to 125 days, but practical access remains constrained.
2. Joint Financing Model: Centre–State funding at 60:40 (90:10 for special category States).
3. Seasonal Pause Clause: Mandatory 60-day suspension during peak agricultural seasons.

Implications of 60:40 Funding Split

1. Fiscal Stress on States: States face an estimated additional burden of ₹30,000–50,000 crore annually amid shrinking fiscal space.
2. GST and Revenue Constraints: Post-GST regime and cess-based transfers limit states’ autonomous revenues.
3. Unequal Capacity Across States: Poorer, high-demand states like Bihar and Rajasthan risk under-provisioning of work.
4. Moral Hazard in Federalism: Centre claims policy credit while shifting expenditure responsibility downward.

Impact on Cooperative Federalism

1. Erosion of State Autonomy: Normative allocation caps state spending even when demand rises.
2. Departure from Fiscal Federal Norms: Earlier full wage support by the Centre recognised asymmetric state capacities.
3. Risk of Regional Inequality: States with stronger finances may sustain employment; others may ration work.

60-Day Agricultural Pause: Policy Rationale

1. Labour Availability for Agriculture: Aimed at preventing farm labour shortages during sowing and harvesting.
2. Alignment with Rural Livelihood Cycles: Seeks convergence between public works and private agriculture.

Impact on Statutory Employment Guarantee

1. Effective Reduction in Work Window: 125-day guarantee shrinks to around 65 operational days in practice.
2. Violation of Demand-driven Principle: Workers cannot seek employment during notified pause periods.
3. Regional Inflexibility: Diverse agro-climatic calendars make a uniform pause impractical.
4. Adverse Impact on Landless Labourers: Forced dependence on private landlords may depress bargaining power and wages.

Labour Market and Wage Effects

1. Downward Pressure on Agricultural Wages: Public employment historically set a wage floor; its suspension weakens this effect.
2. Reduced Worker Choice: Public works cease to be an alternative livelihood during critical months.
3. Evidence from Past Studies: NSS and ILO studies show MGNREGA raised rural wages, especially for women and SC/ST workers.

Governance and Implementation Concerns

1. Centralised Planning Tools: GIS-based plans and national infrastructure stacks reduce local discretion.
2. Digital Exclusion Risks: Biometric and tech failures may exclude the poorest workers.
3. Weakened Panchayati Raj Role: Gram Sabha primacy diluted in favour of top-down templates.

Way Forward

1. Restore Demand-driven Guarantees: Employment ceilings should be flexible and locally responsive.
2. Reconsider Funding Responsibilities: Wage costs should remain a central obligation.
3. Context-specific Agricultural Adjustments: Seasonal pauses, if any, must be optional and region-specific.
4. Strengthen Federal Consultation: States must be equal partners in rural employment design.

Conclusion

As Amartya Sen notes in Development as Freedom, social security enhances agency; diluting employment guarantees risks converting a right into a rationed privilege, weakening both equity and federal trust.